Thursday, April 27, 2017

Government inflation hedges in the sandbox

Don't work.

As soon as the law is passed the bots will bet probability of failure. As the bets pile in, he inflation promise will fail and default. The pits compute the default costs.

No big deal, but better for the government program is to promise that program reserves always earn the even money bet on the tax dollar. We can enforce that in the pits, all S&Ls that meet government standards cone with the even money bot.

Government will find lots of efficiency, and new taxes in the smart layer. But the large programs should bet their own do-re-me. Put them on cash flow accounting, we are all better off. Otherwise, the bots will compute the equivalent cash flow while government be blind.